SB 1240 Summary

• Requires local health care districts operating facilities under contract with public or private entities to use district-owned assets exclusively for the benefit of district facilities, with limited exceptions.

• Mandates that districts and operating entities undergo annual independent financial audits with public reporting of results.

• Prohibits operating entities from using losses incurred during facility operations as credits against the purchase price when subsequently acquiring the facility or other district assets.

• Restricts lease agreements between district boards and tenants to terms not exceeding 30 years for entire hospitals or 10 years for partial hospitals, with benefits limited to those reasonably necessary for hospital operation and tenant capital investment recovery.

• Exempts nonprofit corporations meeting specific criteria (501(c)(3) tax-exempt status, operating general acute care hospitals owned by the district, with the district as sole corporate member) from these requirements.